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Simple 4% withdrawal question
Old 11-01-2007, 08:12 AM   #1
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Simple 4% withdrawal question

The way I understand it, when taking 4% withdrawals it works like this:

I have $1,000,000 so I withdraw $40,000 for that year.
If next year I have $1,100,000, I can withdraw $44,000. Correct?

What if the following year my IRA balance is $900,000? Do I have to take a pay cut or do I still take whatever I took the previous year?
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Old 11-01-2007, 08:16 AM   #2
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year 1 - $40000
year 2 - $40000 + inflation (you define)
year 3 - year 2 + inflation

down year? reduce if you feel better, but not in the plan
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Old 11-01-2007, 08:18 AM   #3
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Here's a great thread on the topic:

http://www.early-retirement.org/foru...ate-19234.html

(Not meaning to squelch the discussion, but to add to it!)
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Old 11-01-2007, 08:23 AM   #4
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No.

$1,000,000 starting portfolio = $40,000 withdrawal the first year.

1st year = 3% inflation.

2nd year withdrawal = $40,000 X 1.03 = $41,2000.

Refer to the extensive discussions in the "Best of" section.
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Old 11-01-2007, 08:42 AM   #5
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Oh WTH, close enough.
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