Ask HN: Do you have the courage to abandon your high paying job?

Re:Ask HN: Do you have the courage to abandon your high payi... by shoo on Tuesday April 10, 2018 @04:28AM (#16799892)

> If that money was invested in dividend stocks, they could have over 38K of passive income a year. In the US, dividend income is only taxed at 15%, too. They could opt to withdraw the 600K from the 401K, use that to buy a condo in cash, and live off the dividend income. Retire now, basically, and live a fairly comfortable life.

Yep, I agree. This is my first thought as well. I don't think it necessarily needs dividend stocks either, general stocks should do the trick. My back-of-the-envelope is:

  * expected return on investment from US stocks at current valuation [+]: ~6%
  * expected inflation rate: ~2%
  * expected real return: ~4%
  * assumed tax rate: 15%
  * annual investment return: (1100000 * 0.04) * (1 - 0.15) = USD $37.4k / year after tax

Assuming you don't have a large family with many dependants or unusually high expenses (medical care, etc) it certainly sounds doable, but perhaps with a dramatic decrease in annual spend for non-essentials (overseas holidays, living in an expensive part of the country, etc).

[+] Compared to historical prices, US stocks are currently very highly priced, hence expected real returns (~4%) are lower than historical average real returns (~7%). See e.g. http://www.philosophicaleconomics.com/2018/01/future-u-s-equ...

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Re:Ask HN: Do you have the courage to abandon your high payi... by EADGBE on Tuesday April 10, 2018 @10:06AM (#16801448)

The 4% rule is a good one as it's (as you mention) much more likely. Also, if your withdrawal rate is 4%, the likelihood of you seeing that income until you die is much, much higher.

As stated elsewhere, getting yourself down to spending 37k a year is going to be the hardest part, no matter where you live.

The problem I see, time and time again as a bystander to the financial industry is that people simple aren't saving enough, or what they have saved is overspent at a rate that's unsustainable. If one needs to live off of 24k/80k/200k a year in retirement; then their investments should reflect that.

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