Comment on Saying you feel like a million bucks is like 'meh' in today's economy.
spacebirb@lemmy.world 9 months agoNo, you’re spending that increase to live. You leave the 1 million to generate gains and take off the top. In ten years that 1 million will have less purchasing power than before.
AlDente@sh.itjust.works 9 months ago
No, you always take less than the increase. This is why most FIRE plans revolve around living on 3-4%. The gain percentage minus withdrawal percentage should ideally leave you with a number greater than the losses due to inflation.
AlDente@sh.itjust.works 9 months ago
To add to this, you are also expected to withdraw more year after year along with inflation. If your safe withdrawal rate allows you to withdraw $40,000 on year one, you can withdraw $40,800 the second year (assuming 2% inflation). Dispite this increase, your portfolio should still grow. If you are withdrawing all of your gains, you are setting yourself up for failure.