Re: Are You Rich? CNN news article
Can anybody reverse-engineer this guy's logic?
He figures that if you're married with kids in your early 40s, will live until age 90, and won't spend more than $200,000 a year, a nice little cushion would be $7.5 million. If you spend only $150,000 a year, $5 million should suffice. Or, if you can ratchet back to $100,000 a year, you'll do okay on $2.5 million.
Duncan, however, assumes a much higher rate of return (about 9.87 percent a year) and assumes you won't be upset if you can't leave your heirs much of an inheritance if any at all.
In other words, you can only withdraw 2.7% if you have $7.5M, 3% if you have $5M, and 4% if you have $2.5M. And he assumes you earn 9.87%?!
In any case, my definition of rich is "saturated." I.e., if you were to get more money, you couldn't figure out how to spend it.