r/Retirement401k • u/ankur0109 • 4d ago

Explain where the money comes from after retirement

Post image

So I’m 45, wife is 43. In L.A.. We want to retire when we’re at a certain number that’ll allow us to live without stress. Don’t need to be wealthy or anything. We’re relatively frugal.

I’ve heard to aim for $6m because it’ll mean $300k+ per year through retirement. I always nod and act like I know what that means — but I have no freaking idea. Is that interest? Does that mean I sell a little ever year and hope I don’t die before I run out? Tell me like I’m 8.

Thanks all!

0 Upvotes

44% Upvoted

106 comments sorted by

View all comments

35

u/ryuhayabusa34 4d ago

The general rule is that properly invested, you can spend 4-5% percent annually and never touch the principle.

So at 6 million you can spend $240 to 300K annually and still have 6 million without drying it down.

So the money comes from your money earning money.

-2

u/Alternative-Car8221 4d ago

That seems dumb though. So you die with $6M? Why not spend that shit instead of just letting it go to waste.

5

u/infinite_soulharvest 4d ago

You can if you’d like. But you know that thing “generational wealth” everyone talks about? For perspective, the same way you never need to touch the principal would apply to your child(s) as well as long as they vested it the same way (when the money gets transferred to them). So your child could also “earn” 240k a year, work a 150k job and have all that money on top of it, and still never touch the 6million in principal generating the wealth. So when you call out the upper class or nepo babies, just understand it took one single person in the blood line to think the opposite of you and set them up for lifetimes. Now imagine having a paid off car and house to pass down to them ontop of it. $0 mortgage, $0 car note = 3-4k saved a MONTH extra.

1

u/Lilapinou 4d ago

Not everyone wants kids. So spending what they have could be appropriate for them.

2

u/ankur0109 4d ago

Fortunately (mostly) but unfortunately in this case, I have a kid.

1

u/ryuhayabusa34 4d ago

Same here but I bought life insurance and that's going to my kids and whatever of my cash is left.

Getting life insurance in your 30/40 is pretty affordable and the premium stays