Anonymous wrote:One for the quants. I don't want to go into the background, but I'd be grateful for someone to do the calculation/estimate.

Here's the problem: $1.3 million today, 70% in total stock market index fund, 30% in a total bond market index fund (Vanguard for both). Selling ("withdrawing") $7000 a month for cost of living.

How many years until I run out of money?

Here's my unsophisticated analysis.

4% interest rate, 1.5% CPI. Will last about 20 years. The risk is that those 20 years dont play out as 'average' years, you could lose out much earlier. As others have said, monte carlo simulations are the way to go.

Assets Expenses Ending
0 $1,352,000 $84,000 $1,268,000
1 $1,318,720 $85,260 $1,233,460
2 $1,282,798 $86,539 $1,196,260
3 $1,244,110 $87,837 $1,156,273
4 $1,202,524 $89,155 $1,113,369
5 $1,157,904 $90,492 $1,067,412
6 $1,110,109 $91,849 $1,018,259
7 $1,058,990 $93,227 $965,763
8 $1,004,393 $94,625 $909,768
9 $946,159 $96,045 $850,114
10 $884,119 $97,485 $786,633
11 $818,098 $98,948 $719,151
12 $747,917 $100,432 $647,485
13 $673,384 $101,938 $571,446
14 $594,304 $103,467 $490,836
15 $510,470 $105,019 $405,450
16 $421,668 $106,595 $315,073
17 $327,676 $108,194 $219,483
18 $228,262 $109,817 $118,445
19 $123,183 $111,464 $11,719
20 $12,188 $113,136 $(100,948)

Assuming a blended average return of 4.8% and a withdrawal increase to account for at least some inflation of 2%, it would last about 20 years. I am assuming the $7/month withdrawn is pre-tax.