Totally enough to retire on. The majority of families live on 75K/ year or less.

https://www.census.gov/data/tables/time-series/demo/income-p...

Assuming a 4% withdrawal rate yielding $100k/year, seems weird to me to retire on a middle class family income (in non-expensive cities) or lower middle class salary (in more expensive cities) when you have the ability to continue making $1m/year gross.

A single person could absolutely retire on 2.5M. That's $100k a year using the 4% rule.

Especially if you move to a lower cost of living place. That is, if that suits you. Some people absolutely love all that the big, expensive cities have to offer and it suits their lifestyle. A lifestyle you won't find in an affordable place.

But yes, saving a couple million and moving somewhere in expensive, buying a house cash and living off of interest is totally doable if you're into that kind of thing.

I thought nowadays the recommendation was the 3% rule.

Still absolutely doable.

The Trinity study said a conservative number was 4%. Since then a lot of people said "Well, I don't want a conservative number, I want a number that has no chance of failure", so went to 3.5% or 3%. Practically I don't think that's a wise choice, a vast majority of the time most of the time, any failures comes from sequence of returns risk and the remaining percent coming from simulated bad returns coupled with a very long life.

This means that as long as you're willing to cut back on expenses if the market dips soon after you retire, 4% is fine, and it's probably not worth the extra X years of your life to try to get that number lower.

With no or minor medical issues, sure.

Add medical, and you need a hell of a lot more than 2.5M$ . Remember, it's the US. We don't care about your health.

Is that number for 30 years? If you’re retiring early you need your nest egg to last for 40 or 50 years.

Don't think of it as a large nest egg; think of it as a modest fixed income. You can easily make 2.5MM last for the rest of your life if you're able to live on 100k. That might require downsizing a bit and moving somewhere with a lower COL, but it's certainly doable.

2.5MM will not let you draw $100,000 for 50 years with inflation.

That’s a great number for retiring at 65. But this thread is talking about working hard for 5 years and retiring super early.

Assuming a 4% return, 2.5MM absolutely does yield 100k per year, forever.

Yes inflation will eat away at the value of that 100k over time, but that's less of a problem if you own your home and have something left over each year to reinvest.

> have something left over each year to reinvest.

Right. So my question is how much can you withdraw to indefinitely draw the same inflation adjusted value?

The annualized return on the S&P 500 since its inception is 10 percent. Adjusted for inflation it's 6.5-7 percent. In the last 20 years, it's 5.9 percent. Adjusted for inflation it's 4.37 percent. So withdrawing 4 percent per year would be reasonable and keep up with inflation. It gets slightly more complex when you think about taking money out during down years is much larger impact than during good years, but that's an exercise for the reader.

check firecalc.com for historical likelihood of portfolio success, given a starting nest egg and an annual withdrawal rate. The 4% withdrawal rate mentioned above is very likely to succeed for an indefinite period, and 3% is essentially impossible. This is all assuming 85% US equities and 15% bonds, and that the future looks vaguely like the past 150 years.

Despite all the skepticism above, the 4% claims are true. Not 100% chance of indefinite success, but close enough to be actionable. You can also google the "trinity study" for more info.

$100,000 per year for 50 years with a $2,500,000 base has a 79.67% success rate.

So pretty likely. But not guaranteed. And for sure not indefinite. Not if you pull the same 4% during down years.

My dream is 5,000,000 and a paid off house. I can live off 3% of that for sure.

85% in equities during retirement is a bad idea.

The longer the duration, the more it is a good idea to be heavy in equities. This can be teased out of the data on firecalc.

If you're buying equities and leaving them alone for decades, sure. But if you're retired and depending on your investments for an income, being 85% in equities is insane. One prolonged bear market could wipe you out.

I'm talking about a fixed income, like bond dividends, annuities, etc. It doesn't adjust for inflation; that's a separate problem. Just saying that if you can get a 4% return on 2.5MM, which is on the high side of realistic, that's a 100k indefinite fixed income.

> It doesn't adjust for inflation; that's a separate problem.

It’s my only question.

Assuming 7-9% return, there is a high chance you can draw 4% annually for a very long time despite inflation