Sat Dec 14 2024, by Tyler Gardner

How to Live Off $2,000,000 in Retirement: A Bold Strategy

Here is exactly how I would live off of $2,000,000 in retirement, and I warn you now, this goes against everything you’ve ever been taught. I'm Tyler, a former financial advisor and portfolio manager, and now I create financial content for free to help you make informed decisions.

1. Invest 100% in Stocks

First, I would make sure I was invested in 100% stocks through one or two low-cost index funds.

2. Ditch the 4% Rule

Next, I'd wave goodbye to the 4% rule. The average $2,000,000 portfolio invested 100% in stocks ends up being worth about $10,000,000 after 30 years with a 4% annual drawdown.

3. Start with a 6% Drawdown

To keep it conservative, I’d start at $62,000 with a 6% drawdown. Adding Social Security, subtracting taxes, carrying the 6, adding the 5, I’d net about $125,000 a year. Planning to have this vest fully paid off by then, that amount should suffice.

4. Increase the Drawdown as Needed

Even with a 6% drawdown, I’d still be projected to have a portfolio worth $2.5 to $2.7 million after 10 years. So if 6% won't cut it, let’s kick it into gear and make it 7%. That way, we’d net closer to $175,000 a year. Even with that 7% draw, I’d be projected to return to my original $2,000,000 portfolio by age 77.

Knowing I only have about 8 to 10 years left to enjoy life, I’d fittingly start drawing down 8 to 10% of my assets to net around $190,000, confident that by then I’ll be fully engaged in a high-stakes bingo circuit in my retirement community.

I'll go out in style at 85 with nothing left but some uncompleted scorecards and financial content that might help you get one step closer to where you need to be.

Source