maximum withdrawal

[oisif]

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 year..tax payable on this...?

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

 

[MJ]

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.

 

[obryanjf]

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    

 

[TromboneAl]

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.

 

[Cut-Throat]

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!