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Hi, I'm David. My wife and I have combined pensions of $8.2M, a paid-off $6.4M home we plan to downsize, and a $7.6M investment account. Monthly outgoings ~$3,000. We are both 67. Can we retire, and is 4% drawdown safe?
writes:

Hi all, long-time lurker, first-time poster. Sorry if this has been asked before (I did search!)

My wife Linda and I have been very fortunate. Combined pensions: $8.2 million. Our home is paid off and valued at $6.4 million, we plan to downsize to something around $1M, freeing up $5.4M. Investment accounts sit at $7.6 million. Monthly expenses are roughly $3,000, which includes everything: groceries, utilities, one holiday per year, Linda's book club.

We are both 67 years old and in good health.

My question: can we retire? And if so, is a 4% drawdown on the investment portfolio sensible? I've read some posts here saying 4% is the gold standard but others are saying 3.5% and I just want to make sure we are being responsible. We don't want to run out of money.

Any advice appreciated. Thank you, David ๐Ÿ™
TOP COMMENTS (4,891)
u/ThriftKingActual ๐Ÿ† FIRE Veteran โ†‘ 12,847 pts โ€ข 2h ago
David โ€” I want to be honest with you here because this community doesn't sugarcoat things.

4% is extremely aggressive. By my modelling, and I've run this through three different Monte Carlo simulators, you are looking at a 0.003% chance of failure at 4%, which means there IS a scenario, however unlikely, where you run out of money by age 312.

I would strongly recommend 3% maximum. Also, and I can't stress this enough, if you and Linda can find any way to trim that $3,000/month, even by $200-$300, you would sleep so much better. Have you looked at your book club expenses? Those can really add up.
u/IndexFundIan โ†‘ 8,203 pts โ€ข 2h ago
Not to alarm you but have you considered what happens if the market drops 40% and stays there for 60 years? At 4% you would genuinely be in trouble. I would actually model out 2.5% to be safe. Also, and this is important, are all $7.6M in index funds? If not, that's the first thing to fix. Everything in index funds. The fees on anything else will absolutely destroy your retirement.

The fees, David. The fees.
u/RetiredAt29_No_Really โ†‘ 6,441 pts โ€ข 1h ago
Personally I retired at 29 with $340,000 and live on 1.1% drawdown in a yurt in Montana. I haven't bought anything since 2019. It's very freeing. You and Linda should consider whether you actually need $3,000 a month or whether that's lifestyle creep talking. What's in that $3,000? I'm guessing there's fat to cut.
u/JustOneMoreYear_Mike โ†‘ 4,102 pts โ€ข 1h ago
Honestly David I wouldn't retire yet. You're 67 which is early. If you work just one more year you'll be in a much stronger position. Maybe two. Three at most. The extra cushion would be immense. Think about it, you'd go from $15.8M to maybe $16.5M in assets. That's genuine peace of mind.
u/Moderator_BigNums_Finance MOD 2h ago
Hi David, thanks for the post! Just a reminder per Rule 7: please do not say the actual dollar amounts in the title. It makes other members feel bad. Also your post has been marked as a Humblepost. Next time please use the weekly thread for posts with assets over $5M. Leaving it up this time. Good luck! ๐Ÿ™‚
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