I know this has been discussed numerous times , but I just want to be sure. Let's assume I have $1 million in a taxable account invested in a 60/40 balanced fund.
I currently DO NOT reinvest the dividends as these are taxed either way....so dividends (assume at 2%) are directed to my bank account.
I then withdraw an additional 2% of the earnings every year to get me to the 4%. Put aside inflation issues for the moment to keep the math simple.
So I have withdrawn 4% ($40,000) from the portfolio.
If dividends are only 1.5% the following year, then I would withdraw 2.5% from earnings to reach 4.0%. Do I have this right?
Also, does the withdrawal need to be adjusted (downward) if a bear market occurs to account for sequence of return risk or is this risk already "baked" into the equation and a non-issue? Thanks.
I currently DO NOT reinvest the dividends as these are taxed either way....so dividends (assume at 2%) are directed to my bank account.
I then withdraw an additional 2% of the earnings every year to get me to the 4%. Put aside inflation issues for the moment to keep the math simple.
So I have withdrawn 4% ($40,000) from the portfolio.
If dividends are only 1.5% the following year, then I would withdraw 2.5% from earnings to reach 4.0%. Do I have this right?
Also, does the withdrawal need to be adjusted (downward) if a bear market occurs to account for sequence of return risk or is this risk already "baked" into the equation and a non-issue? Thanks.