Reply to $7M vs $10M

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Reply to "$7M vs $10M"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]It really depends on your level of spending and  comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs. [/quote]

The 3-4% safe withdrawal rate assumptions factor in inflation. This means in 30-some years, you will be able to withdraw a lot more than 250k. But yes, there is a big difference between a 210k/yr safe withdrawal rate from 7M and 300k/yr safe withdrawal from 10M.

With 3 teen kids, our yearly expenses will be over 210k/yr for the next 10 years while we pay for college and grad/med/law school. Then there will hopefully be a few years of supporting our parents in elder care which will keep our yearly expenses close to 200k. Then a few years of awesome over the top traveling at an age where health insurance will be outrageous. So after 15 years of spending a little more than the safe withdrawal rate from 7M, we might get a few years where our expenses are under that since health care will be covered and we will not have a desire for extensive travel. Then elder care for ourselves will kick in and we will have to start spending down principal. With 10M, we would likely always be under the safe withdrawal rate.

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Life rarely goes per plans....[/quote]

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