Wed Aug 07 2024, by Tyler Gardner

How to Spend $250,000 a Year in Retirement with $2 Million

If I retired with $2 million and wanted to spend a quarter of a million dollars a year, here’s exactly what I would do. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to help you understand your retirement options.

1. Invest for Growth

Let’s say I retired at 65 and anticipated living until 83. That gives me 18 years to fund my retirement. I would invest 75% of my assets across three equity funds: VOO, QQQM, and SCHD. This investment mix would offer me about a 7% annual appreciation after inflation.

I would draw down about $150,000 a year from selling stocks and gross an additional $22,350 from the dividends of SCHD and VOO. Yes, I acknowledge that this dividend return would diminish over time.

2. Invest in Bonds

I would then invest 15% of my assets in five- and ten-year government bonds, generating another $12,000 a year.

3. Keep Cash Reserves

I would hold $200,000 in cash on the sidelines. If the market takes a hit in the early years of my retirement, I wouldn’t have to sell my full $150,000 worth of stocks; I could use some of that cash to supplement my income if needed.

4. Leverage Social Security

Finally, at 70 years old, I would start living even more extravagantly as I cash in on my full benefits of Social Security, which is projected to be about $48,000 a year.

5. Conclusion

And that, my friends, is how I would live off of close to $250,000 a year in retirement and aim to officially die with zero.

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