$1M in 401k, Need to Withdraw $70k per year for 10 yrs., Can I still have $1M in principle after 10 yrs.?

G-Man

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Trying to play out a scenario where someone has $1M in a tax-deferred account and they need to withdraw a fixed amount of $70k per year for 10 years and want to still have close to $1M after 10 years.

Is this possible? How could I achieve this with low to moderate risk? Should I just put the $1M in a S&P 500 fund and forgot about it? Should I put $500k in a S&P 500 fund and $500k in a fixed income fund?

Just curious how others would approach this scenario.

FYI. Here is how the scenario would play out if the $1M was invested in the S&P 500 for the last 10 years.

1726007066249.png
 
How long is a piece of string?

Thanks for posting the link.
 

Looks like REITs is a good performer.
 
FireCalc is your friend. A 100% equity portfolio of $1M withdrawing $70k a year will have an average balance of $1.3 M after ten years! Hooray!

Except.... that portfolio falls below $900k in 70% of the simulations. And below $500k 18% of the time. Even for 50/50 portfolio, you will fail almost 80% (below 900k) or 5% (below 500k).
 
FireCalc is your friend. A 100% equity portfolio of $1M withdrawing $70k a year will have an average balance of $1.3 M after ten years! Hooray!

Except.... that portfolio falls below $900k in 70% of the simulations. And below $500k 18% of the time. Even for 50/50 portfolio, you will fail almost 80% (below 900k) or 5% (below 500k).
ok. I have not played around with FireCalc in years. I will start to play with it again. Thanks for responding.
 
Trying to play out a scenario where someone has $1M in a tax-deferred account and they need to withdraw a fixed amount of $70k per year for 10 years and want to still have close to $1M after 10 years.

Is this possible? How could I achieve this with low to moderate risk? Should I just put the $1M in a S&P 500 fund and forgot about it? Should I put $500k in a S&P 500 fund and $500k in a fixed income fund?

Just curious how others would approach this scenario.

FYI. Here is how the scenario would play out if the $1M was invested in the S&P 500 for the last 10 years.

View attachment 52272
Try the years 2000 to 2010 and I'm guessing the final number would look much worse though I haven't actually tested that.
 
Might work, though in ten years a million won’t have the same purchasing power due to inflation.
 
I caution you in following the REIT advice. The person who wrote the article lives in San Francisco. The real estate market in California appears different from most other states from what I’ve read. I believe the author has unretired a few years ago.
 
My free answers are:

"Is this possible?" Yes, but it could also fail.
"How could I achieve this with low to moderate risk?" Invest in an index ETF and let it ride, but your chances of success aren't 100%. "Should I just put the $1M in a S&P 500 fund and forgot about it?" That's what I would do. But there's no guarantee you'll end up with $1M. A 3.5-4.5% withdrawal rate makes your desire much more likely.

YMMV
 
Asking this question is like someone asking if a 7% withdrawal is safe withdrawal or not. The answer has to be no. In another thread I posted about our friends who started with $1.2M to $1.5M, started withdrawal of $48K a year and is now withdrawing $72K a year. After 7 years, they are down to about half a million dollars, and in another 7 years or so, they are going to need to sell their home to raise more money. One thing to note is that he kept alot of his money in money market, and the rest 50-50 in equities to bond.
 
"Can I still have $1M in principle after 10 yrs.?"

Yes, in principle, you could have $1M in 10 years. Is that what you meant to ask?
 
"Can I still have $1M in principle after 10 yrs.?"

Yes, in principle, you could have $1M in 10 years. Is that what you meant to ask?

Sorry. My portfolio would still be worst close to a $1M after 10 yrs.
 
Asking this question is like someone asking if a 7% withdrawal is safe withdrawal or not. The answer has to be no. In another thread I posted about our friends who started with $1.2M to $1.5M, started withdrawal of $48K a year and is now withdrawing $72K a year. After 7 years, they are down to about half a million dollars, and in another 7 years or so, they are going to need to sell their home to raise more money. One thing to note is that he kept alot of his money in money market, and the rest 50-50 in equities to bond.

The goal for the scenario is to draw down on the retirement portfolio for 10 yrs. to bridge the gap until delayed SS kicks in at age 70 and still have a $1M left. At age 70, there is no need to draw down on the retirement portfolio anymore because 4 guaranteed income sources are more than enough to pay for the expenses.
 
You could probably get close with high quality preferred stocks. I own a few that yield more than 7%. ALL-B comes to mind... Allstate issue yielding ~8%.
 
Of course it is POSSIBLE....

The question is 'is it likely?'.... as other have done the math (I will trust them on it)... not likely...
 
You could probably get close with high quality preferred stocks. I own a few that yield more than 7%. ALL-B comes to mind... Allstate issue yielding ~8%.
Thanks for the feedback. I will do some research on high quality preferred stocks and respond back to this thread on some possible choices.
 
Although another variable dependent on the stocks purchased are any dividends being harvested included in the formula?
 
Although another variable dependent on the stocks purchased are any dividends being harvested included in the formula?
No. However there are some high yielding dividend stocks out there like Altria Group (MO) that just increased their dividend ($4.08 per share annually) and is considered a Dividend King (has increased their dividend for the last 50+ years). You might not get much stock appreciation, but the dividend seems to be steady. Although this year, the stock price has increased over 34% this year so far.

Could that be an option?
 
Are you sure you will not need to increase your annual $70k withdrawal to reflect the impact inflation will have on the spending power of the $70k? I suppose if you are only covering a mortgage the answer is no.
 
Are you sure you will not need to increase your annual $70k withdrawal to reflect the impact inflation will have on the spending power of the $70k? I suppose if you are only covering a mortgage the answer is no.
Sure. $70k fixed per year is all I need from my portfolio during the 10 yr. time frame.
 
No. However there are some high yielding dividend stocks out there like Altria Group (MO) that just increased their dividend ($4.08 per share annually) and is considered a Dividend King (has increased their dividend for the last 50+ years). You might not get much stock appreciation, but the dividend seems to be steady. Although this year, the stock price has increased over 34% this year so far.

Could that be an option?

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