David1961
Thinks s/he gets paid by the post
- Joined
- Jul 26, 2007
- Messages
- 1,085
Hello. I have a question about withdrawal rates. Does the amount you withdrawal each year depend on the amount you took out the year before or does it depend on what your portfolio is worth at the beginning of that year.
For example, to make the math simple, let say someone has $1m to live off and is going to withdrawal 3% ($30 k) per year. Suppose that after the first year, the $1m shrinks to $900k. Is the withdrawal for the next year 3% of 900k OR is it $30 k plus whatever the inflation rate is for the year? I’m pretty sure it is the latter. If you have the right investment mix, over the long haul, you will make money.
For example, to make the math simple, let say someone has $1m to live off and is going to withdrawal 3% ($30 k) per year. Suppose that after the first year, the $1m shrinks to $900k. Is the withdrawal for the next year 3% of 900k OR is it $30 k plus whatever the inflation rate is for the year? I’m pretty sure it is the latter. If you have the right investment mix, over the long haul, you will make money.