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maximum withdrawal
Old 08-27-2005, 03:54 PM   #1
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maximum withdrawal

When we are talking 4% (mostly accepted standard) are we talking 4% net...or before taxes? Say you retire on
2 millions...80.000$ per payable on this...?

I ts kind of hard to figure what will be your tax bill...dividend , capital gain, interest income, or simply capital how do one calculate this?

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Re: maximum withdrawal
Old 08-27-2005, 04:53 PM   #2
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Re: maximum withdrawal

I have always assumed that the 4% would include all expenses including all taxes owed. If you withdrew $80k and owned $15k in fed and state taxes then you would have only $65k usable cash for your non tax expenses.

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Re: maximum withdrawal
Old 08-27-2005, 04:53 PM   #3
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Re: maximum withdrawal

4% gross is the way I believe it is calculated. *What ever your situation, the taxes must come out of the 4%. *4% is the model when the model is a fixed at retirement, inflation adjusted draw. * *

You should model in excel pulling from the different asset classes and accounts(IRA/401K, Roth IRA, taxable account, annuity, etc) to see roughly what your taxes will be. *Of course a lot depends on your particular stocks, mutual funds and turnover. *

job * *
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Re: maximum withdrawal
Old 08-27-2005, 06:35 PM   #4
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Re: maximum withdrawal

Yes, I'd definitely say that includes taxes and all other expenses (such as fund expenses). The question FIRECalc answers is, "How will I do if I remove X% every year?" It doesn't matter what you remove it for.
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Re: maximum withdrawal
Old 08-27-2005, 07:07 PM   #5
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Re: maximum withdrawal

Yup 4% total.

However, if you get one of those books that the guys in prison write, that explain how it is against the constitution to pay income taxes, you can spend the entire $80K on yourself!
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