Wed Jan 01 2025, by Tyler Gardner

Living Off $1,000,000 in Retirement

Here is exactly how I would live off of $1,000,000 in retirement without ever running out of money. I'm Tyler. I'm a former financial advisor and portfolio manager, and now I make financial content for free so that you don't have to pay for it.

1. Portfolio Division

I'd start by dividing my portfolio between risky assets, like stocks, and risk-free assets, like money markets.

2. Asset Allocation

I'd allocate 90% to growth and 10% to risk-free.

3. Withdrawal Strategy

Knowing that if we were to draw down 4% per year, the average portfolio would have about $6,000,000 in it after 30 years. However, knowing that I'd rather die with zero, I'll draw down closer to 6% per year.

4. Annual Withdrawals

Now this is important: I would take that $60,000 a year from the money market fund, so our risky assets have room to grow uninterrupted.

5. Expected Growth

Based on historical data, risky assets are projected to grow at 7% per year in real terms, and since we're only drawing down 6%, the portfolio should continue to grow.

6. Market Fluctuation Management

Finally, to all those shouting that if the market doesn't do well in the first few years I'm screwed, well, not exactly. If stocks do well in any given year, we'll sell some stocks and rebalance to the 90-10 split. If stocks do not do well in any given year, we'll just continue to use what's left of the money market fund to avoid selling stocks at a loss.

And if any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

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