I am trying to determine whether I am looking at this the right way. If I save $25,000, or if my net worth otherwise increases by $25,000, have I, in effect, created a $1,000 annual annuity income stream. If this is the case, it will help me to better understand how much my net worth will need to be in order to retire early and have the annual income I will need in early retirement. I am basing these numbers on a 4 percent safe withddrawal rate (SWR).
Also, would I be able to increase that $1,000 annual income periodically to keep up with inflation?
I am assuming that if this premise is accurate, then I would need to have the $25,000 invested in a way that would, on average, earn at least 7 percent interest (4% for the drawn down and 3% for the inflation factor).
Does this sound right to you? Thanks for your insight.
Also, would I be able to increase that $1,000 annual income periodically to keep up with inflation?
I am assuming that if this premise is accurate, then I would need to have the $25,000 invested in a way that would, on average, earn at least 7 percent interest (4% for the drawn down and 3% for the inflation factor).
Does this sound right to you? Thanks for your insight.