I just finished reading the "adjusting withdrawls upward" thread and now Im confused about the very basics of the 4% rule.
Several people stated things like "4% plus inflation".
If I start with $1 Million and withdraw $40,000 th first year, what is my withdrawal the second year? Lets say the market went up and even after my $40,000 withdrawal is accounted for, my end of year balance is now $1,100,000
Is my 2nd year withdrawal?
1) Still $40,000
2) 4% of $1,100,000 or $44000
3) 4% plus inflation? If this is correct, how do we figure the exact amount
4) Some other number
I assume that option #2 is what people would call "adjusting upward" and is up to each person to decide if they want to adjust or not. My main question is this: how do you figure "4% plus inflation"?
Several people stated things like "4% plus inflation".
If I start with $1 Million and withdraw $40,000 th first year, what is my withdrawal the second year? Lets say the market went up and even after my $40,000 withdrawal is accounted for, my end of year balance is now $1,100,000
Is my 2nd year withdrawal?
1) Still $40,000
2) 4% of $1,100,000 or $44000
3) 4% plus inflation? If this is correct, how do we figure the exact amount
4) Some other number
I assume that option #2 is what people would call "adjusting upward" and is up to each person to decide if they want to adjust or not. My main question is this: how do you figure "4% plus inflation"?